Intercept Pharmaceuticals Inc: A Whole New Class of Blockbuster Drug Is Born

Why Intercept Pharmaceuticals just quadrupled and Conatus Pharmaceuticals saw a 70% gain.

Jan 9, 2014 at 7:43PM
Even in the volatile world of biotech investing, the idea of a stock instantly quadrupling in value is like a unicorn -- a mythological beast that investors never expect to actually see.
Well, a unicorn just showed up today, and potentially brought an all-new class of blockbuster drugs with it.
Shares of Intercept Pharmaceuticals (NASDAQ:ICPT) shot up 281%, at one point hitting $305 per share. For reference, shares closed yesterday at just $72 and change. Intercept's competitor, Conatus Pharmaceuticals (NASDAQ:CNAT), enjoyed the day, as well, seeing a 57% pop in value just for having a similar drug in its pipeline.
Intercept crushed a mid-stage liver disease trial for its lead drug candidate OCA so resoundingly, that it ended the trial early, even though roughly half the trial population was considered non responsive because they hadn't yet finished their course of treatment. Wall Street analysts couldn't be more excited, issuing buy calls almost as quickly as shares were ascending.
What makes OCA so enticing is that it has an orphan drug designation, and is in late-stage trials for primary biliary cirrhosis (PBC), but its success today came from treating nonalcoholic steatohepatitis (NASH). This much more common disease is one of the leading causes for liver failure, but it has no approved treatments. An estimated 20 million Americans suffer from it. 
The most interesting thing to watch is how Intercept prices OCA if it's approved. It could follow an orphan drug pricing model for what is clearly not an orphan indication. There's an unmet clinical need, but the patient population is in the millions, not thousands. While some may question the fairness of that pricing, it has been done before. Questcor (NASDAQ:QCOR) used an orphan drug designation to increase prices throughout Acthar's non-orphan indications. While the practice has gained Questcor quite a few critics, investors have been handsomely rewarded -- shares are up 3,500% since 2007, when Questcor increased the price of Acthar from approximately $1,650 to $23,000. 
In the below video, health-care analyst David Williamson discusses today's amazing events, the potential market opportunity for Intercept, and the risk/reward dynamics of the stock post-quadruple.

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David Williamson has no position in any stocks mentioned. Follow David on Twitter: @MotleyDavid.

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A Financial Plan on an Index Card

Keeping it simple.

Aug 7, 2015 at 11:26AM

Two years ago, University of Chicago professor Harold Pollack wrote his entire financial plan on an index card.

It blew up. People loved the idea. Financial advice is often intentionally complicated. Obscurity lets advisors charge higher fees. But the most important parts are painfully simple. Here's how Pollack put it:

The card came out of chat I had regarding what I view as the financial industry's basic dilemma: The best investment advice fits on an index card. A commenter asked for the actual index card. Although I was originally speaking in metaphor, I grabbed a pen and one of my daughter's note cards, scribbled this out in maybe three minutes, snapped a picture with my iPhone, and the rest was history.

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I love the exercise, because it makes you think about what's important and forces you to be succinct.

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Everything else is details. 

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